TMI Blog2023 (1) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... hment of the assessee - HELD THAT:- As decided in assessee own case [ 2022 (9) TMI 1388 - ITAT MUMBAI] as factually demonstrated that the payment made by the assessee to its indian agent is at the arm's length price of 18%. That being the case, following the aforesaid decision of the Co-ordinate Bench, we hold that the Indian Agent of the assessee cannot be considered as an agency PE. Thus, grounds are decided in favour of the assessee. Non-taxability of income in the nature of IT support services ( FTS ) - According to assessee FTS arising from IT Services is not taxable in the light of beneficial provision in India France tax treaty - HELD THAT:- As assessee contends that the income which has been offered to tax by the assessee in return of income, was not taxable. However, AO did not entertain such a claim on the ground that assessee has not filed any revised rate of interest making such claim. For saying so, the AO relied on the decision of Goetz India [ 2006 (3) TMI 75 - SUPREME COURT] but it has not precluded this Tribunal to admit such a claim even if not raised before the AO. So we admit these grounds of appeal and since, this issue require fresh determination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the Act: Taxability of freight charges of INR 14,15,60,433/- from transportation of cargo through feeder vessels 7. erred in holding that 7.5% of freight charges from transportation of cargo through feeder vessels is income taxable in the hands of the Appellant and not eligible benefit under Article 9 of India-France DTAA; 8. erred in not taking cognizance of the decision of jurisdictional Bombay HC in the - appellant s own case for AY 2002-03 (ITA No. 2175 of 2009), wherein the Hon'ble HC has followed the decision in case of Balaji Shipping (UK) Ltd. and held that freight income from transportation of cargo through feeder vessels is not taxable in India; 9. erred in not taking cognizance of the decision of jurisdictional Tribunal in the Appellant s own case for AY 2012-13 to AY 2014-15 AY 2015-16, wherein the Hon'ble Tribunal has followed the decision of Hon'ble jurisdiction Bombay HC in the Appellant's own case and held that the freight income from transportation of cargo a through feeder vessels is eligible for relief as per article 9 of India-France DTAA; 10. erred in holding that while income from slot arrangement would fall within the amb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate the said income from IT support services does not qualify as royalty as per the provisions of India - France DTAA as the payment of use of Software does not satisfy the requirement of use of , or the right to use, any copyright 18. failed to appreciate that the provision of IT support services by CCSA was mainly aimed at facilitating its shipping business and accordingly, the amount received will assume the character of profit derived from the operations of ships as it is inextricably linked with its shipping activity and hence, exempt under Article 9 of India-France DTAA; 19. erred in not appreciating that Appellant has inadvertently offered the said income to tax at the rate of 10% plus surcharge and education cess (as per section 115A of the Act) in the return of income, it does not automatically constitute income chargeable to tax in India; 20. erred in not following the decision of Hon ble Pune Tribunal in the case of Appellant s Indian Agency company (through whom Appellant has received income), CCAI (ITA No.2314/PUN/2017 dated 2 January 2020) while adjudicating the similar payment for AY 2012-13 has held that the payment made for IT Services by CCAI to the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncillary to the transportation of cargo in international traffic and it falls under Article 9 of India France Double Taxation Avoidance Agreement (hereinafter DTAA ). The AO rejected the claim of the assessee and held in the draft order that the IHC received for transportation of goods are in domestic areas. Further the AO held that the handling charges which are paid for loading/unloading/stacking etc. of containers are different from the charges incurred for transportation of goods. Accordingly, the AO held that IHC is taxable in India as business profit and these are not covered by Article 9 of DTAA or section 44B of the Act. In absence of details of expenditure incurred for IHC, the AO applied net profit rate of 10% on IHC receipts and accordingly added Rs.37,75,68,316/-, to the total income of the assessee. The Ld. DRP rejected the objection filed by the assessee, against the aforesaid addition, by following its own earlier directions rendered in assessee s own case for preceding assessment years, after noting that in the year under consideration facts are pari-materia to the earlier assessment years and the issue is still pending before higher forums. In conformity with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its own order passed in AY 2012-13 in the subsequent two years for the reason that there is difference between Article 8 of India-Belgium DTAA and Article 9 of India France DTAA. According to Ld DRP that the India-Belgium DTAA contains specific provisions to include any other activity directly connected with such transportation , whereas the same is absent in the India France DTAA. The Ld A.R, on the contrary, submitted that the presence or absence of the above said provision will not make any difference. In support of this proposition, the Ld A.R placed reliance on OECD model conventions and the Commentary thereon, which are extracted above. 16. We notice that the decision in the case of Safmarine Container Lines N.V (supra) has been rendered by Hon'ble Bombay High Court in the context of India-Belgium DTAA. However, in the case of DIT Vs. A.P.Moller Maersk A/S (ITA No.1306 of 2013 dated 29-04-2015), to which India-Denmark treaty would apply, the Hon'ble Bombay High Court has held that the principles involved in the decision of Safmarine Container Lines N.V (Supra) also govern the case of A.P. Moller Maersk A/S (supra). There is no dispute that the Article 9 of India-F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. Before us, the Id A.R demonstrated that the Article 9 of India France DTAA and Article 9 of India-Denmark DTAA are identically worded. Since the decision rendered by Hon'ble Bombay High Court in the case of Safmarine Containers Lines N.V (which was rendered in the context of India-Belgium DTAA) was held to be applicable to India-Denmark DTAA also by the Hon'ble Bombay High Court in the case of A.P.Moller Maersk A/S (ITA No.1306 of 2013), the Id A.R submitted that the absence of the expression any other activity directly connected with such transportation in the India-France DTAA will not make any difference. We notice that the contentions of the assessee also get support from the OECD model convention discussed supra. 21. In view of the foregoing discussions, we agree with the contentions of the Ld A.R on this issue. Accordingly we hold that Inland Haulage Charges received by the assessee shall form part of income from operation of ships in international traffic and accordingly Article 9 of India-France DTAA shall apply to it. Accordingly we uphold the order passed by Ld DRP in AY 2012-13 on this issue and reverse the orders passed by it on this issue in AY 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before higher forums. In conformity to the directions issued by learned DRP, the AO passed the final assessment order. Being aggrieved, the assessee is in appeal before us. 13. During the course of hearing, learned AR submitted that this issue is covered in favour of assessee by decisions of the coordinate bench of the Tribunal rendered in assessee s own case for preceding assessment years. 14. On the other hand, learned DR vehemently relied upon the orders passed by the lower authorities. 15. We have considered the rival submissions and perused the material available on record. We find that similar issue was decided in favour of assessee by the coordinate bench of the Tribunal in CMA CGM SA vs ACIT (supra), for assessment year 2017 18, following judicial precedents especially that of AY. 2016-17 rendered in assessee s own case for preceding assessment years. The relevant findings of the coordinate bench of the Tribunal, in aforesaid decision, are as under: 8. The Id.Authorized Representative of the assessee submitted that the Assessing Officer and DRP have erred in holding that freight charges for transportation of cargo through feeder vessels is income taxable in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the Tribunal which view was upheld by Hon ble High Court in assessee s own case cited supra, we uphold the plea of the assessee and direct the AO to delete the addition on account of freight charges for transportation of cargo through feeder vessels. As a result, grounds No. 7 12 raised in assessee s appeal are allowed. 17. The issue arising in grounds No. 13 15, raised in assessee s appeal, is pertaining to treating the agent of assessee in India as permanent establishment of the assessee. 18. The brief facts pertaining to this issue, as emanating from the record, are that the AO noticed that the assessee s agent in India is concluding the contract of cargo transport by issuing bill of lading, which is legally binding on the assessee. Further AO observed that agent in India is assessee s own set up in India for the purpose of carrying out its shipping business activity in India. Therefore, according to him, the assessee is carrying out business of operation of ships in India and thus having PE in India as per Article 5 of DTAA. The Ld. DRP rejected the objection filed by the assessee, against the aforesaid findings, by following its earlier directions rendered in as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the assessee. [Emphasized by us) There has been no change in the facts in impugned assessment year. No material is brought on record to suggest that the transaction with Indian entity is not at arm's length. On the contrary assessee has demonstrated that transaction is as per APA therefore, no further adjustment is required. Respectfully following the decision of Co-ordinate Bench in assessee's own case for assessment year 2015-16 grounds No.11 to 13 are allowed. 22. The issue arising in the present appeal is recurring in nature and has been decided in favour of the assessee for preceding assessment years. The Ld. DR could not show us any reason to deviate from the aforesaid decision and could not point out any change in facts and law vis- -vis earlier assessment year. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee s own case cited supra, we uphold the plea of the assessee and accordingly, allow grounds No. 13 15 raised in assessee s appeal. 23. Ground no. 16 to 20 pertaining to non-tax ability of income in the nature of IT support services ( FTS ) amount to Rs.7,60,05,380/-. 24. Facts in brief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim cannot be entertained by him in view of the judgement of Hon'ble Supreme Court s decision in the case of Goetze India Ltd. V/s CIT reported in 157 TAXMAN 1(2006) wherein it has been held that for making a new claim for deduction before AO, an assessee has to file a revised return making the claim and not otherwise. Aggrieved, the assessee is before us. 26. According to Ld. AR, these grounds are relating to nontaxability of FTS received by the Appellant from its Indian agency company [CMA CGM Agencies India Private Limited ('CCAI')]. According to him, the Appellant/assessee had inadvertently offered the same to tax at the rate of 10% plus surcharge and education cess (as per section 115A of the Act) in the return of income filed for the year under consideration. In this context, he drew our attention to the decision of Co-ordinate Bench of this Tribunal (Pune) in case of CCAI (i.e. Indian agency company of the Appellant) (ITA No.2314/PUN/2017 dated 2 January 2020), wherein it was held that the FTS paid by the assessee is not chargeable to tax in India as per the beneficial provisions of India-France tax treaty and hence, the assessee was not liable to withhold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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